The FTC Doesn't Want You To Have To Stay At Your Crap Job Forever

The agency wants to ban non-compete contracts

On Thursday, the FTC announced their proposal for a new rule that would ban non-compete clauses in employment contracts, on the grounds that they constitute unfair competition and therefore violate Section 5 of the Federal Trade Commission Act. The agency says the move "could increase wages by nearly $300 billion per year and expand career opportunities for about 30 million Americans." That is a huge deal.

“The freedom to change jobs is core to economic liberty and to a competitive, thriving economy,” said FTC Chair Lina M. Khan in a statement. “Noncompetes block workers from freely switching jobs, depriving them of higher wages and better working conditions, and depriving businesses of a talent pool that they need to build and expand. By ending this practice, the FTC’s proposed rule would promote greater dynamism, innovation, and healthy competition.”

The new rule would make it illegal for an employer to:

• enter into or attempt to enter into a non-compete with a worker;

• maintain a noncompete with a worker; or

• represent to a worker, under certain circumstances, that the worker is subject to a non-compete.

It would also require them to inform employees with current non-compete agreements that they are no longer subject to them.

A non-compete contract means that if you want to leave your job for a higher paying job offer in your same industry and in the area you live in, you cannot do that without your former employer suing you. It also creates an uneven playing field in salary negotiations, because while the employer can say "Fine, I'll just replace you with someone else," the employee cannot say "I will leave here and take my talent somewhere else."

Non-compete clauses often still hold if the worker is fired or laid off, which makes it incredibly difficult for those people to find new jobs in their industry, especially if they don't have the luxury of being able to pack up and move — which people often do not after being fired or laid off.

There was a time when non-compete clauses existed only for high-level employees, for the explicit purpose of protecting "trade secrets." In recent years, however, they are included in the employment contracts of all kinds of employees, including nurses, hair stylists and even fast food workers. What trade secrets would they be protecting? That the "secret sauce" is just mayonnaise, ketchup and Worcestershire sauce?

19 percent of all employees in the United States are currently under non-compete agreements, not because they are protecting any "trade secrets, but rather employers just don't want them to be able to leave for a higher paying job — or be in a position to bargain for a higher salary at their current one. Employers have also frequently abused the privilege by telling employees they are under entirely unenforceable non-compete agreements. California has banned the practice since the late 1800s (thus Silicon Valley) and even there, 19 percent of employees there are under "non-compete contracts" that can never actually be enforced.

“Research shows that employers’ use of noncompetes to restrict workers’ mobility significantly suppresses workers’ wages—even for those not subject to noncompetes, or subject to non-competes that are unenforceable under state law," said Elizabeth Wilkins, Director of the FTC's Office of Policy Planning. “The proposed rule would ensure that employers can’t exploit their outsized bargaining power to limit workers’ opportunities and stifle competition.”

It seems as though the only reason anyone can come up with for why this would be bad for society, aside from protection of trade secrets, is that it would somehow make employers less likely to invest in training their employees well.

“Companies could say ‘We’re not going to invest in specialized training or pass on trade secrets to employees, because they might just go off and use that against us,’” Trump-era FTC General Counsel and noncompete agreement enthusiast Alden Abbott told Slate . 

"By reducing the probability of worker exit, non-competes may increase employers’ incentives to provide costly training," read a 2016 report on non-competes from the Treasury Department.

 This is not a real concern . It would obviously be detrimental to their own business for employers to not train their employees well while they are working for them. That's not something they do as a benefit for the employees, out of the goodness of their hearts, but so that their own business can operate. Also, if employers simply want to reduce turnover for fear all of their training will go to waste, they should pay them well and maintain a pleasant working environment, not simply make it impossible for them to leave.

After several decades in the thrall of "job creators," US Americans are finally starting to wake up to the idea that we don't actually have to let them do whatever they want, lest they stop providing the jobs we need to survive. In fact, the jobs market is extremely tight right now, which suggests that none of these brilliant innovators have decided to pack up and head for Galt's Gulch quite yet.

 Do your Amazon shopping through this link, because reasons .

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